Political Instability and Its Effects on Pakistan's Economy

Pakistan was a very poor and predominantly agricultural country when it gained independence in 1947. Pakistan's average economic growth rate since independence has been higher than the average growth rate of the world economy during the period. Average annual real GDP growth rates were 6.8% in the 1960s, 4.8% in the 1970s, and 6.5% in the 1980s. Average annual growth fell to 4.6% in the 1990s with significantly lower growth in the second half of that decade. Farming is Pakistan's largest economic activity. In FY 1993, agriculture, and small-scale forestry and fishing, contributed 25 percent of GDP and employed 48 percent of the labor force. Agricultural products, especially cotton yarn, cotton cloth, raw cotton, and rice, are important exports. Although there is agricultural activity in all areas of Pakistan, most crops are grown in the Indus River plain in Punjab and Sindh. Considerable development and expansion of output has occurred since the early 1960s; however, the country is still far from realizing the large potential yield that the well-irrigated and fertile soil from the Indus irrigation system could produce. The floods of September 1992 showed how vulnerable agriculture is to weather; agricultural production dropped dramatically in FY 1993. Pakistan had, during its early years realized the need for development of appropriate industrial infrastructure that included setting up industrial estates and an engineering base. The first such estate was established beyond Lyari in Karachi at the present Sindh Industrial Trading Estate, SITE at Manghopir road. It was provided necessary facilities such as water, roads, and waste disposal system. To augment the pace of industrialization, the Shipyard and Engineering Works was created to cater to the needs of engineering material, plant and equipment.

This might suggest that Pakistan did very well with the basics of planning for industrialization. However, there were a number of...